In Asia, the yen gained 0.2% to 156.11 per dollar, supported by a hawkish shift in tone from Bank of Japan officials. Analysts noted that the subdued market ahead of the U.S. holiday could create an environment conducive to intervention in the dollar/yen pair. “That could be an attractive environment for Japanese authorities to intervene,” said Francesco Pesole, forex strategist at ING, though he added that officials may still prefer to act after a dollar-negative data event.
The euro slipped 0.05% to $1.1590 after earlier hitting a 1½-week high of $1.1613. Market participants are closely monitoring developments over a possible Ukraine peace deal, with U.S. envoy Steve Witkoff set to travel to Moscow next week for talks. However, a senior Russian diplomat indicated that no major concessions are expected.
The New Zealand dollar stood out, reaching a three-week peak of $0.5728 and gaining roughly 2% since the Reserve Bank of New Zealand’s recent hawkish pivot. While the central bank cut rates on Wednesday, it indicated that the easing cycle may be over, and strong economic data on Thursday—including higher retail sales and improved business confidence—has fueled expectations of a potential rate hike by December 2026. “Kiwi green shoots are really starting to mushroom quite quickly now,” said Westpac strategist Imre Speizer.
The Australian dollar also strengthened following a hotter-than-expected inflation report, which reinforced expectations that the easing cycle there is over. Australia’s 3-year and 10-year government bond yields, at 3.86% and 4.5% respectively, are the highest among G10 currencies, giving the Aussie an attractive carry. Analysts note that the currency has recently tracked China’s yuan closely, suggesting room for further gains amid the yuan’s recent strength. The yuan itself was steadied at 7.08 per dollar on Thursday after intervention by China’s central bank.
Sterling rose to $1.3265, its highest level since late October, and is on track for its largest weekly gain since August, as Britain’s recent budget helped ease investor concerns about public finances.
Meanwhile, the U.S. dollar index was slightly higher at 99.62 but remained well below last week’s six-month high, setting up a weekly decline not seen since July. “The market will soon be thinking about the big trades for 2026, and I strongly doubt that ‘long USD’ will be one of them,” said Brent Donnelly, president of Spectra Markets. He noted that any appointment of a rate-cut advocate, such as White House economic adviser Kevin Hassett, as Federal Reserve chair could further weigh on the dollar.
With U.S. markets closed for Thanksgiving, trading is expected to remain thin, potentially amplifying currency moves in the final sessions of the week..